Dead broke again

Question: If you were a private businessman who had deliberately failed to fund your contractual obligations to your shareholders and creditors, where would you be?

Answer: In jail.

A new Pew study reveals that the pension funds of the states have been deliberately underfunded by fully one trillion dollars. Note: this mess has nothing to do with Social Security, which if you have read my previous post you now know is insolvent—that is, its 2010 revenues will not be sufficient to meet its 2010 expenditures. Rather, these underfunded (which is a euphemism for insolvent) state pension funds are the retirement funds of teachers, police, DMV goons, etc. Over the years state legislatures, trying to avoid politically unpopular tax increases, have simply siphoned off tax revenues that should have been applied to state pension funds and spent them on day-to-day expenses of government. If you had done something of the sort in your private business, you would now be enjoying fifteen years of state supervised hospitality at a prison near you. State legislators, however, have no legal or fiduciary responsibilities to their constituents or employees, so they’re off the hook. The worst that they can suffer is being booted out of office.

So here’s the situation in America today: The Social Security system is living on borrowed money, and the borrowing must increase enormously year after year as Baby Boomers by the millions reach 65. State pension funds are insolvent, and the states (many of which are themselves trapped in budget crises that cannot be resolved) cannot raise sufficient money to fully fund them. Private pensions and 401k fund have been gutted.

If you haven’t yet viewed Gary North’s presentation about the bleak future of retirement in America, now’s a good time as any because the future isn’t getting any better.

Read about the state pension fund mess here

Dead broke

According to economist Gary North, 2010 is the year that Social Security (SS) becomes insolvent. The budgeting scam whereby excess SS tax revenues have been siphoned off to fund the perpetual budget deficit is over. The growing depression has reduced SS tax revenue below the amount required to pay Grandma and Grandpa their monthly checks, so the missing billions must be acquired from the general fund. Nowadays the government borrows 40 cents for every dollar it spends from the general fund; this means that Social Security is now living on borrowed money and will do so indefinitely into the future. The amount of money the government must borrow to keep the system from failing will keep growing without limit as millions of Baby Boomers reach 65 with each passing year. Chinese and Japanese chumps are now funding American retirements. Lucky them. How long can we soak these chumps for loot? Not long if the recent Chinese divestiture of $45 billion in US Treasury debt is any indication. More divestitures seem certain as the federal government floods the world with trillions of freshly printed dollars that keep losing what little value they started with. The budget deficit/public debt mess is beyond repair, and the Ponzi scheme called Social Security is rushing to its inexorable climax: total bankruptcy. What are we going to do?

Well, first, listen to the following talk by Gary North about your future prospects both as a worker and a retiree. Then start preparing yourself for a really bleak future because we’re in this mess for the rest of our lives.

Retirement Armageddon